Iran’s move towards a market economy has had critics, and it has not even started yet.
In prior decades, socialism was gaining ground in the region, thanks to a lot of influence exerted by the neighboring Soviet Union.
At present, the market economy model has gained wide acceptance. However, former proponents of government control, crony capitalists that gain from monopolies and officials whose job is to enforce state interference are subverting the reason behind having a market economy.
One of the main justifications for state intervention is the market’s failure to distribute resources effectively, wrote senior Iranian economist, Mousa Ghaninejad, in an article published by Iran Chamber of Commerce, Industries, Mines and Trade.
“The real question is how to alleviate the shortcomings of a market economy. There is no viable contestant to the free market in principle,” he said.
Iran’s contemporary history is littered with disastrous examples of state intervention to fix this perceived market failure. From distributing consumer goods with coupons to wasting away water and gasoline by giving them free to farmers, the state has always been the one squandering resources at the whim of the ill-advised politician.
Ghaninejad, however, concedes that the list of these market failures that led to government disasters is by no means exhaustive.
The market economy is gaining favor these days, despite efforts to curb competition and increase state power.
“They say they accept the free market as a vehicle for allocating resources efficiently, nothing more,” he said.
But this is a fallacy, which relies on playing with the word “efficiency” with regard to the distribution of resources. Is efficiency what few state politicians deem it to be or the result of the demand and thinking of multiple players, as it is in a free market economy?
Furthermore, thinking about a free market as just a distribution method demeans liberty, said the economist.
It makes freedom a means for resource distribution. Here, Ghaninejad quotes 19th-century English Catholic historian, politician and writer, Lord Acton: “Liberty is not a means to a higher political end. It is itself the highest political end.”
If the counter argument wins, then liberty can be taken out of a market on any pretense to serve a different purpose. Then, we will have a repeat of disastrous government intervention.
